tv Trending Business Bloomberg August 25, 2015 10:00pm-11:01pm EDT
stock response. alibaba wants to forget the tumbling share price and focus on the customer. saying it won't the first time that the market falls. #,'t forget to include that trending business. jakarta running under way. gains and losses in shanghai. we're looking at a pulse at what is going on with your money. david: it is a little bit better but let's go back to china. the headline over the last half hour when it came to the currency and the money market was the reaction to the cut yesterday so raymond b, -- reminbi, where our way? the weakest level in several years. 640.ix came in at about
64214. from the cut off. there are 649 right now so they are converging a little bit. above saw it weaken to 65127 early this morning. the shanghai composite is all over the place. find its footing it was down another 7.5% yesterday and barely moving. i want to get you a one-day chart to show you how violent these moves are. 2976 is the level. the money markets, i alluded to this that liquidity has been tight and what we are seeing out as a drop in money market rates.
day andthe low of the we were at 255 yesterday which is a drop of about 25 basis points. you look at the overnight in the 14 and the one that should be reflected again all this liquidity coming to the market. what you're looking at now is your 270 basis points. down a little bit. that is what is happening at the moment. china is still the top story. rishaad: chinese stocks opening height yet again after we have been hearing from david. we of the steepest five-day route in nearly two decades. cut was short-lived. >> we have been back-and-forth between negative and positive territory in the opening half hour in shanghai. equities lost about half of
their value since their mid june peak. june 12 seems like such a long time ago and the market got what it wanted overnight. it got that rrr rate cut in the benchmark indices still having trouble staying and positive territory. it did address the fear factor in the rate cuts last night helped stem the global route but like we saw in the early going this morning u.s. stocks started out strong but came down weaker. already many are saying that more easing is needed to improve the fundamental problems facing the chinese economy. china is making its fifth rate cut since november to stimulate growth and it is lowering the amount of money banks the to set aside for reserve as liquidity injection was needed. says, overall it was a positive development that will help curb anxiety and lessen the
butagion to global markets they are saying that more easing is needed. another 50 basis point reduction if china keeps defending the currency. the central bank's chief economist already out saying the rate cuts do not indicate a shift of monetary policy. that remains prudent. i want to add that chinese police and securities regulators are launching numerous investigations into alleged market will practice there even alleging insider trading and forging of official stamps. brokerages under scrutiny as well. eight employees are suggested and four others are being sent -- investigated for other possible investigations and even employees of this magazine are being probed for the alleged spreading of fake stock and
futures information. state media is saying the government needs to get involved and pure if i the capital market. those are its words. the bigger look at it later on in the program. handle on twitter and include the #trending business. let's have a look at saw the other stories we are watching here today. here is yvonne with the roundup. to the sideing down effect later on this afternoon. too optimistic and forecasting a 57% drop in net income for the scene out from a year ago. earlier this month we heard from them announcing plans to reduce processing bite 3 million tons
from the original plan because of high product inventories. stockpiles china's increased to the highest level in more than three years adding to signs of slowing demand. filmlowing economy is filling a global commodities route that pushed crude prices below $40 a barrel for the first time since early 2009. flagship has reported its first earnings since the reorganization of the sportster retail conglomerate. that shares rose 4% ahead of it yesterday that billioname in at $14 during the first of this year and announced an interim dividend of 70 hong kong cents per share. they are reorganizing a business empire that spans across more
than 50 countries. take a hutch has also announced $40 billion in mergers related to its telecommunication is this. finally, let's talk about alibaba telling his employees let's forget about the stock price. investor shares fell below the ipo price for the first time monday. daniel zhang took over the company for the first time monday and is written a memo urging steph evers to shift their focus to customers away from the slumping stock and said this will not be the last time. the shares did rebound on wall street tuesday. just above their debut price. rally of stocks rally evaporated and the final hours of trading. the decline has happened and concerns but which slow down. the company was not doing enough to weed out fake goods on its
site. governorsustralia's held a summit in sydney. what is he mean, is this a more subtle prodding from glenn stevens trying to get the tony abbott government moving? let's give that question to the man who knows -- paul allen. paul boy, the central bank governors are notorious for speaking obliquely and cautiously but if glenn stevens is becoming less subtle by the day he has previously said there are limits to what monetary in junean achieve and he was musing that perhaps australia's growth is not the 3.25% we have been a assume in but perhaps it is lower than that. just this morning he was asking a series of rhetorical questions to himself about how credible sustainable growth can be achieved and even raised the
issue of labor market reform which is one of the things that helped bring down the howard government a few years back. theerms of reform government has been predicted -- presenting comparatively fewer bills including an ugly debate and disagreement over gay marriage and expensive scandals. abouts has been talking impediments and the decision-making process. it is worth noting he only has about a year to run now so it could be that we are seeing a more forthright government at the reserve bank. rishaad: thanks a lot for that. paul allen there for us in sydney. coming up later, the indian rupee seeing its biggest gains in more than year. we will have news live from mumbai.
ashaad: shipping is regarded being a fantastic weathervane for the economy but the slowdown is that industries increasingly -- containers largest operator has seen its shares fall $.25 since june. moment is if the going on because that is what everybody wants to know. >> it is actually going very well. has been growing capital and our and we ares robust very well into development we're
quite happy with the way we are. we have no control over what is and ourg over there expectation would be for weight would exceed expectations transpacific you say is the strongest at the moment. does that mean it is strong in terms of exports out of asia to, let's say the americas, or is it the other way around? guest: is both ways. america is exporting nicely to asia in spite of the current situation. situation of china devaluing the yuan has been a major factor. rishaad: a strong dollar is good
for you, isn't it? guest: it is good for trade generally. us. is welcoming news for it cuts 40% of our operating costs. rishaad: what do you do with that? if you were in aviation i would say, do you hedge it all out? guest: some hedging. but you do not want to hedge everything and one go. some float and some you hedge long-term. rishaad: there is always a consensus that maybe oil prices go weaker but and the long-term they are going to be declining. together you see we're coming down operating -- reflecting the
fact that operating costs have been driven down so i expect the industry to be profitable for this year. the first half has been terrific and we are looking forward to a decent remainder of the year. as far as business is concerned with a long-term contract we don't really have the exposure so there willis be ups and downs. rishaad: walk me through this. we have charter rates which are high at the moment. then you have freight rates which are relatively low which are not good for you. same time it reflects the flak that operating costs have come down so much. rishaad: because of the fuel yucca >> that is very important. but this is actually helpful in terms of the operating cost. down the oilst is
causes down and the insurance cost is down as well so on top of that you have the fuel cost coming down so all of those things that are very helpful for because our model top line fits with the charter rate, which is great news for us so that is what i keep saying we have been through ups and downs. we are been through 2008 and 2009. our long-term contract has always performed well, including the tough time during 2008-2009. with increased everything. rishaad: are you anticipating everything through this market turmoil or should it continue? do you foresee any fallout in your industry? guest: the major thing is really china and other emerging countries unable to d-link the
financial volatility from the economic volatility. hope the stock market would be contained so the developmentsonomic would be still and i think china will be able to do that. they have the fiscal and monetary tools as well as the political tools to deal with it. i don't foresee a hard landing at all i think it will be a soft landing. 7% is very good. rishaad: on the official figures, of course. what about your business in china itself. you're talking about landings did are you seeing a slowdown yeah co >> i definitely see a slowdown but the silver lining is the market was at a high healthy level and that prices have started climbing up. i think that will have more material impact on the average
household than the stock market. some moneyple put into the stock market and i don't take it would affect at all. rishaad: you could chart how many stock market accounts have opened. >> at the end of the day i believe china will be ultimately be successful. rishaad: with it back to your industry with operating costs you your these huge burdens, i think 118 in total including new orders, how many of these will be in mega shipping. >> we believe the big ones. rishaad: what sort of size are we talking. we're talking like aircraft carriers the main carriers for the trades and asia and europe and north america and we specialize in the most
sophisticated container ships and long-term contracts with the operators in the fixed term rates so it does not really affect us at all. massive how do these ships lower your operational cost? >> you're talking about anywhere from 20% to 30% which is a huge advantage compared with the smaller units. it 830.ike a 747 or they are more fuel-efficient and can carry more cargo in the older design. we are pioneers in that regard and are doing very well. rishaad: does that mean freight rates will fall? >> they will fall but the underlying profitability will move up and that is something people don't quite understand.
freight rates to us are not necessarily a bad thing so long as your operating cost is reduced even further. rishaad: always a pleasure to have you on the program. >> thank you for having me. >> these are the stories making headlines around the world. atomic energy chiefs have hailed the nuclear deal with iran saying it has had a historic opportunity to resolve long-standing issues. the iaea says they have addressed allegations they are working on nuclear weapons but have declined to be specific. obama told democrat donors he is ready to deal with what he calls crazies in certain problem areas. a state department report says that caroline kennedy used a private server to send sensitive but unclassified messages.
the inspector general says she did it to violate policy. the news comes amid investigations at the hillary clinton's use of private e-mail when she was secretary of state. there has been a trail of describe -- destruction across japan. it had wind at 180 kilometers an hour and even stronger gusts. flights to and from the area were canceled and bullet train services suspended. the same storm hit the philippines earlier killing 21 people and leaving 15 unaccounted for. , it was thenext fall heard around the world. justin's and china actually did happen and we talk about the media blackout surrounding china's market turmoil.
see everyone talking about just one thing. the chinese markets the wall street journal, stocks plummet globally. asia to wall street are talking that if you go to the mainland those news outlets just have a brief mention in fact it is hard to find. i think the top story of the day today was the president's visit to tibet in 1998. it takes a little bit of searching here until you say oh there you go. the markets fell below the 3000 so other people talking about this is people daily some of the big outlets that did not mention too much about it. the main tv network skipped mention of the stock route. one person saying called it, are
they not going to mention anything about the market roundup? and this person says don't blame the government if you're losing theymoney on the market give you chances to cash out, sink or swim it is your choice. and people daily was probably one of the ones during the april plunge that encourage investors to buy stock. so i don't know if they consummate -- stomach another type of open wave in the reporting. rishaad: up next, plunging part -- profits. a nightmare for some but not for bhp. after the break, chief executive andrew mckenzie. ♪
stories, the chinese central bank making its presence felt twice more. just hours after announcing its fifth rate cut since november. fault -- have been dropping dramatically and have been swinging between red and green. it is read at the moment. alibaba's chief executive is calling on them to ignore the plunging stock market.
making these comments in a memo to the 35,000 employees. and new zealand using its money to spread its wings after a 24% jump in net profit they wanted expand capacity by 11% in the next financial year including the addition of two new financial destinations. the fight to its rival. were looking at tokyo mid lunch on withd what is going the market. david: i wonder where that is. let's talk about the overall picture. red butseeing mostly
the first time in about two weeks we are seeing the regional benchmark actually higher. tokyo istion in looking good for now. yen in thatrday the mix. at 119 right now the nikkei back in the green and volatilities back as well. so china it is not exactly the rebound that investors were hoping for. directly change direction. my last count was over 10 times. yuane i talk about the want to mention as well the narrative will have to shift at some point to how much of their
own stock these chinese corporate's have put up as collateral if the market doesn't rebound. but satoru the currency, the yuan was fixed at the lowest level weakest level in about and is now pushing toward 642.5. that is really what the rate cut will do. money market rates are encouraging we are on the way up and now on the way down following this injection of cash from the central bank. whether that is enough is another debate altogether. the other question is outflows out of china and the data suggests if you look at the reserves that china has been spending a lot of money to keep
the current growth where it is. so that is where we are at the moment. rishaad: that is one of the biggest understatements ever. let's focus on foreign exchanges. china closing at its lowest rate in four years. we have on the one hand the premier saying he doesn't see any reason for further depreciation in that yuan and then we get that fix, the lowest in four years. guess it is a perhaps -- a question of translation and i think that is probably the key point that they have been trying to get out there is that we should not expect the yuan to just fall heavily for an extended period and i would be very surprised if it falls too steeply ahead of the summit in
the u.s. between president she and president obama. the stockoo far from market yesterday and that tells you that the pressure is for a stronger dollar but we have to keep it in context that it's the weakest you when since 2011 is just one of many weakest points for the range of currencies against the dollar. the aussie a few days ago was a lowest since 2009. it is not as though it is an extreme weakness. rishaad: tell me something, you meant inch -- mentioned something crucial which is president xi's visit to the u.s.. for want of a better phrase it is a window dressing is a lot of money comes into the market they are keeping things as they are ahead of that meeting. >> it wouldn't hurt. certainly when traders and investors look at what to expect
from chinese policy it would be unwise to ignore a key political meeting the strategic dialogues often have an influence on the dollar and china fixing this picture but obviously the u.s. market is under growth pressure as well. stability would be ideal in going into those meetings so they can talk about something other than the markets crashing as they hold their meetings to rishaad: let's talk a little bit about the devaluation of the yuan and how much it has contributed to the relative devaluation we have seen an emerging market currencies. obviously it was a big surprise when they made the announcement on the 11th of then, most of the day-to-day movements have been 0.1% or maybe 0.2% which is clearly tiny in the context of
what is happening in the world's i think we have a combination of factors china is probably contributing to some of the instability and markets but i don't think it is the key driver and a lot of the weakest currencies tend to be commodity exporters and the scale of the falling commodity prices cannot be attributed just to china over the last month or so. fed'sd: how much will the mind have been changed by what is happening and number two, is that part of the reason we're seeing so much appreciation for the currency majors and not the e.m. once that have been hastening their move to the bottom you come -- bottom? >> it has been pretty quiet lately. would love to hear a bit more from them and perhaps we will
once the symposium takes place later this week we will hear from bill dudley his own is interested to hear his take on markets. he has been pretty sanguine so far about the china and the equity markets overall so i would be surprised if it is a game changer just yet. there are still a full three weeks before the fed meeting and the key data releases including the payroll support so that is probably the key for them but as for the u.s. dollar there is no bat doubt it has been punished very severely against the major currencies and the euro for the perception that a fed hike is far more distant because that really was key in the first quarter of this year. to sell the obvious currencies of the central bank's pursuing quantitative easing and by the u.s. dollar and said he
so it got very lopsided and we are seeing a lot of short covers. he'sad: thank you for that joining us from the west bank with his views on the foreign exchanges. let's tell you what we've got elsewhere. is renowned of pork and is giving a boost with sales jumping 45% at the start of the year. have been driven out of the market by week profit and expectations of high demand from china pushing pork prices higher and they saw their biggest two-day gain in six years. warner bros. is the latest to turn their attention to china in talks with china media capital to make movies on mainland china. the world's fastest-growing phil market and expected to become the overall leader. shinji reporting a first quarter
profit since the china slowdown and sent prices that profits to six-year lows and sent profits to climb to $155 million and it will grow this year the slowest rate for a decade. copper touching its lowest price down just on monday about 1%. since were talking about mining its talk to minors. the boss saying the second half of the year will be stronger than that could be down to the revival taking place in the biggest market. we spoke with the ceo after the earnings were released and began by asking about chinese growth and how that will affect future results of the company. we have been in china for a long time and have a lot of data happening at the headline growth number. when they were growing at double
digits that data matched up with what we had been seeing and they are growing around 7% so you can trust the numbers. we do not believe that will be there forever because there transitioning and will grow at a slower rate but over the years that will tend to trend down and some of the things we're seeing in the moment, rather than being some kind of traumatic effect is the inevitable shift from being more investment led to more consumption led which we believe that china is managing pretty well. >> could you quantify the importance of chinese growth. for every percentage point that china fails to meet that target, what does it mean to be hp's revenue and earnings? >> it is not that simple because we are not looking at headline numbers we are looking at things
like iron ore and coal and copper but right now we're seeing reasonable straightforward growth and to china and it matches some of the things that apple has said that despite some of the concerns product is getting placed and we are selling production quite a see steadyhead so we as she goes. >> here is one thing that investors ask when they look at it company like bhp or your competitors, rio tinto, fortis q. why maximize production in a low price environment? reserves are your future earnings why not the higher cost production in the ground? do not have high cost production iron ore. we had the lowest cost production who deliver into china. this is a great business for us
and it has a margin of greater than 50% in all of the growth we are getting at the moment is because we're running our business better. effectively we get more tons for no additional investment. very logical thing for us to do and in a free market the lowest-cost producer generally has the right and the opportunity to continue to produce. upthere is a reduction it is to the high cost producers not the low-cost reducer which means the lower cost of iron ore is delivered more securely and we get a profit for shareholders. >> the saudi's are trying to do the same thing in the oil market would you analogize that? >> i would say it is near identical. i think they have woken up to the fact that by feeding market
share they are actually losing more than they might have gained by reducing their market share and hanging onto a higher price and we would agree with them that is exactly the game that we play with other commodities. up next, shanghai swinging after the latest government intervention. what is next for the people's bank of china?
january. shinzo abe scrapped the original costss the construction ballooned to $2 billion. they are now expected to come up with a new plan by the end of the month. is taking aon backlash in the u.s. from angry plaintiffs taking action under the pseudonym john doe. sued by being representatives of the users after hackers dumped personal information on the internet. they said they paid to have ashley madison scrub their data but failed to do so. just turned eight which means he is ready to become a dad. and the cincinnati zoo he was where he isnesia hoped to find a mate. sumatra rhinos are critically endangered and only about 100
survive in the wild and there are only nine in captivity. rishaad: having another day of wild gyrations despite the --erventions after the seat steepest five-day route in nearly two decades. also the weakest you want reference rate since 2011 one the chief economist is in beijing. what are the implications for market?nd the equity growth it isr clearly a positive. not just the latest interest-rate cut and reserve requirement cut but the accumulated impact of all of the easing we have seen over the course of 2015. we have nothing interest rates cut five times in the 2 trillion yuan bailout with support for the real estate sector and the
devaluation of the currency to we would be very surprised if the accumulated impact of all of tot easing was insufficient avoid growth for the target of market, on the equity the psychology of mainland investors is difficult to predict in the early evidence from trading this morning suggests that the rate cut has not been sufficient to restore positive sentiment. if you look at the pattern of government intervention and market movement over the last few weeks with the evidence seems to suggest is that with downward momentum in the market being strong and prices so far out of line with fundamentals that even relatively strong interventions from the government have been
insufficient to stabilize the market. rishaad: what in your view is the real state of the chinese economy? >> there are a lot of questions out there about whether we can believe the official data and can growth be really be so close to 7%. my view is all of the proxies do a less good job about telling us what is really going on dan the official data. theaad: i will bring in tim group bloomberg intelligence director of asia. what is your take on all of this? down by 3.4%. >> i would agree with one of the comments that tom had made with regard to the psychology and movement of the chinese market has much more to do with the asds of individual investors opposed to being tied to underlying economic
fundamentals. i think the chinese stocks in a hong kong market or a better fundamental reflection of what is going on. rishaad: we have seen that premium narrow. >> it is quite interesting because if you look at the share of ocular premium index it is toe from 150% premium down notablyhat has struck nowthe insurance stocks trading at a premium in hong kong. premier inuoye have the saying he didn't see need for further depreciation and then we get the weakest fix since 2011. what gives? >> it is bewildering. in the middle of august when the
pboc may that surprise decision to devalue the yuan and very much seemed like china was entering into the competitive depreciation game aiming to give exports a boost and then we had the pboc coming out very strongly and denying that in a period of what appeared to be enforced stability of the currency and now we have had the premier reiterate the view that depreciation is not on the agenda but the rate cut seems to tell a different story and threatens to add to the selling pressure. rishaad: thank you very much indeed and tim as well. we're going to stay with currencies because we have the indian rupee rising to 15 month highs. let's go to monday. back in two. ♪
rishaad: this is trending business. saw some of its biggest losses as the emerging market selloff abated. so what is going on. how does it all play out? volatile pretty yesterday. we saw trending 480 points higher hitting intraday lows before staging a smart recovery ending higher by nearly 300 points and the indian markets are unlikely to regain a steady footing until china stabilizes but most market watches remain confident that india is still a good bet that the recent volatility we have seen will abide. reflecting specific comments we have heard whether from the finance minister saying that
there is no cause for panic just volatility index has suggestingnearly 5% easing among investors after surging nearly 64% monday when they hit their biggest ever intraday fall. the rupee also rebounding yesterday hitting its strong gains received in the european markets and buying it lower levels. you also have the biggest institutional domestic by here propping up the mess from one of india's largest oil companies. there is a glimmer of hope emerging yesterday as far as the stacks bill goes which could provide a unified taxation system in the government is